Property investment in Helsinki, Finland: Waterfront villas in the European harbour city

As far north as one would wish to live, the Finnish capital includes more than 300 islands, a bustling harbour, and culture, rich in history. International property buyers have turned to the city and are taking advantage of lucrative rental yields.

Feb 03, 2017 | By Teri Chong

SHARE

Built along a series of curving peninsulas and islands that jut into the Gulf of Finland, Helsinki is a classic harbour city. Streets curve around bays, bridges connect to nearby islands, and ferries can be seen crisscrossing the horizon.

The city’s central hub is clustered on a small waterfront peninsula, but Helsinki’s Greater Metropolitan region covers 764 square kilometres and includes over 300 islands as well as the suburbs of Espoo and Vantaa. Together, these districts form Finland’s largest urban area and offer buyers an array of lifestyle options from contemporary villas on the coast to historic apartments downtown.

As a strategic port, Helsinki has a history of international trade and foreign occupation. Originally founded by a Swedish king in 1550, the city became the Finnish capital in 1812 when it was rebuilt by Russian tsars along the lines of a miniature St. Petersburg. Today, a fascinating blend of architectural influences dot the skyline, including Byzantine-Russian, Art Nouveau, as well as Functionalist and Modernist Finnish styles. Following an isolated Cold War period, today’s Helsinki is once again a cosmopolitan meeting point of eastern and western Europe, a vibrancy that is reflected in an influx of Russians and Estonians, a multilingual population, and an increasingly international mix of property buyers.

“Over the last 50 years, Finland has become much more of an international city”, says Kenneth Katter, Managing Director at Snellman Sotheby’s International Realty in Helsinki. “Today we might get a request from investment bankers in Los Angeles or Swedish nationals who work in Finland”.

The draw, according to Katter, is Helsinki’s reputation as a clean, secure and dynamic place to live. “The city is quite active. The old harbour has moved out and this has freed up a lot of energy. Essentially, people have become the focus. How does the city enable people to live, work and play”?

Part of the municipal strategy has been a focus on building density. Construction of new single-family homes has decreased over the past decade and spatial planning instead favours density and connectivity. Many new apartment complexes are situated next to public transportation. The proposal for a new Helsinki city master plan is based on a prediction that there will be 865,000 inhabitants and 560,000 jobs in Helsinki in 2050; it calls for increased density in the city centre, northward extension towards Pasila, new rail connections, and new mixed-use schemes that combine housing and commercial spaces.

Helsinki’s outlying islands are also seeing renewed development. A subway line is currently being built to Lauttasaari, an island just three kilometres to the west of the city center that is a popular recreational getaway. Its highest point, Mylly Rock, looks out over a range of forests, parks and marinas, and two beaches. A new subway station is also being built in Kulosaari, an island suburb to the east of downtown that Katter describes as “a little like Brooklyn”, complete with cultural offerings, views of the city, and easy proximity to downtown.

However, villas continue to be a popular choice for affluent buyers wanting a private retreat. Prices for villas within Greater Helsinki start at around USD 570,000, depending on the size and the neighbourhood. At the high end, prices range from one to two million euros (USD 1.13 million to USD 2.26 million), with some up to EUR 3.5 million (USD 3.96 million) and more.

Keneth Katter says he sees the greatest demand for large three and four-bedroom villas and for small investment properties that offer solid rental returns. While price growth tends to be slow in Helsinki, prices for owner-occupied housing in Helsinki’s metropolitan area increased by 1.5% in 2015, according to Statistics Finland. In the rental market, which accounts for 48% of Helsinki’s dwellings, yields of 6% to 8% and higher can be expected. “The rental market is not regulated at all”, Katter explains. “However, there is support from the government for student housing, so this brings about unexpected rental levels”.

The rental yields are a draw for many international buyers, including investors from Asia. Katter recently sold several units to a Chinese couple who plan to rent them out and receives regular enquiries from Korea and Singapore. With an eight-hour flight time from Beijing, Helsinki is easier to reach than destinations in southern Europe and some buyers are also choosing to relocate to the city. “Finnair is using Helsinki as a hub for many Asian locations. There is increased interest and people are starting to settle here”, Katter says. Given the city’s clean air, laid back lifestyle and market stability, he expects demand will continue.

There are no restrictions for foreign property investors in Finland, but to ensure money laundering is not involved, funds from foreign buyers are tightly controlled and must be transferred by a Finnish Bank

Merikatu 1A, Hanko

Located in the popular seaside resort of Hanko, this two-story apartment has four en-suite bedrooms, a double height living room and a combined living area of 187 square metres Residents enjoy easy access to shops, restaurants, beaches and leisure activities including the services of the Regatta Hotel.

Pippurniemi 65

A high-tech designer home 40-minutes west of Helsinki features tall glass walls and stunning scenery. It was inspired by Ralph Lauren’s Jamaica beach house, although this one looks out onto the chilly Baltic Sea and is surrounded by pines instead of palms. 440 square metres with four bedrooms, a TV-room, wine cellar and outdoor areas great for entertaining. Amenities include a heated swimming pool, separate sauna building, Jacuzzi and 328 foot water frontage with dockage for two boats.